When a contract respecting property contains an agreement to be
performed by the owner of it when he shall "dispose of or sell it,"
it is obvious that the words "dispose of" are not synonymous with
the word "sell," and their meaning must be determined by
considering the remainder of the contract.
In this case, an agreement by the owner of the property which
formed the subject of the dispute that he would not dispose of or
sell it was held to have been violated by a lease of it for a term
of two years.
In contract. Verdict for the plaintiff, and judgment on the
verdict. The defendant sued out this writ of error. The case is
stated in the opinion.
Page 132 U. S. 119
MR. JUSTICE MILLER delivered the opinion of the Court.
This is a writ of error to the Circuit Court of the United
States for the District of Colorado. The action was originally
brought by Mary J. Sumner, the present defendant in error, against
David K. Hill plaintiff in error, in the District Court of Arapahoe
County, in the State of Colorado, and was afterwards removed by
Hill on the ground of diverse citizenship into the circuit court of
the United States.
It appears from the record that on and prior to the 12th day of
February, 1880, the defendant Hill and Edward R. Sumner, and his
son, Edward H. Sumner, were the owners of a mine, called the
"Buckeye Lode," situated on Fryer Hill in the California mining
district, in the County of Lake and State of Colorado; that the
said Edward R. Sumner was the owner of one-eighth, and his son,
Edward H. Sumner, the owner of another one-eighth, undivided, of
this mine, of which Hill was the owner of the remainder. It also
appears that Hill was a man of considerable means, which was not
the case with the others. That some work had been done upon the
mine, and money expended upon it, which had been advanced mainly by
Hill. That in this condition of affairs, Edward R. Sumner sold his
one-eighth in the mine to Hill and took from Hill a written
obligation to pay him $10,000 for it, in the manner prescribed by
an instrument in writing, of which the following is a copy:
"This is to certify that Edward R. Sumner, of Leadville, State
of Colorado, has this day sold to me one undivided one-eighth part
of the Buckeye lode, vein, mine, or deposit, situated on Fryer
hill, in the California mining district, in the County of Lake, in
the State of Colorado, for the sum of ten thousand dollars, to be
paid as follows, to-wit, ($1,308.43) one thousand three hundred
eight dollars cash in hand, the receipt of which is hereby
Second. To pay all expenses for and on behalf of Edward
Page 132 U. S. 120
R. Sumner upon one undivided one-eighth part of said mine, owned
by Edward H. Sumner, which has accrued since the first day of
February, A.D. 1880, and which may hereafter accrue for sinking the
shaft upon said mine, for all machinery purchased in sinking the
shaft, and in operating the same until pay mineral shall have been
Third. To pay on behalf of said Edward R. Sumner, for the
benefit of Edward H. Sumner, owner of said one-eighth interest of
the whole of said mine, one-eighth part of all the expenses for
litigation regarding the title and the possession thereof, or for
trespasses which may be committed upon said property from and after
the date above written.
Fourth. And to pay on behalf of the said Edward R. Sumner
one-eighth part of all other assessments, taxes, and expenses --
meaning upon the one-eighth interest owned by Edward H. Sumner,
being independent of the one-eighth conveyed to me this day by said
Edward R. Sumner -- of every name and nature which may justly
accrue against said property, which sum or sums of money, as well
as all other sums of money which may be advanced and paid out by me
in pursuance of this agreement, shall be applied by endorsement
upon this contract by the said Edward R. Sumner or his assigns in
payment of the aforesaid sum of ten thousand dollars, as far as the
same shall go to the payment thereof.
Fifth. And, after deducting all the aforesaid sums of money
above mentioned, I hereby agree to pay to the said Edward R.
Sumner, or his order, the residue of the said ten thousand dollars
out of the first production of my interest in said mine so soon as
the same shall be realized therefrom, and if at any time I shall
dispose of or sell one-eighth part of said mining property, then
and in that case the residue of said ten thousand dollars shall
become immediately due and payable to the said Edward R. Sumner or
his order. In no case am I to pay out more than ten thousand
dollars on behalf of said Edward R. Sumner on the one-eighth
interest of Edward H. Sumner, including the $1,308.43 mentioned as
Witness my hand and seal this twelfth day of February, A.D. 1880
at Chicago, Illinois.
"[Signed] DAVID K. HILL [Seal]"
Page 132 U. S. 121
It seems from this paper pretty clear that Edward R. Sumner, in
conveying his one-eighth, was anxious to secure the other
one-eighth held by his son, Edward H. Sumner, from being lost by
reason of his inability to pay such assessments as might be made on
it in the progress of developing the mine and bringing it into
profitable operation. It appears from the record that Hill
continued work upon the mine, and received credit upon this written
contract, until October 10, 1883, and about that time he ceased to
work upon it or to make any further effort to develop it. On July
29, 1885, Hill made a lease of the mine to George A. Jenks, who had
been agent of Hill in the previous efforts to develop it. The
following is a copy of this lease:
"This agreement of lease, made this 29th day of July, in the
year of our Lord one thousand eight hundred and eighty-five,
between David K. Hill of the City of Chicago, County of Cook, and
State of Illinois, and Robert Esser, of the City of Leadville,
County of Lake, and State of Colorado, lessors, and George A.
Jenks, of the City of Leadville, County of Lake, and State of
Colorado, lessee, witnesseth:"
"That the said lessors, for and in consideration of the
royalties, covenants, and agreements hereinafter reserved, and by
the said lessee to be paid, kept, and performed, have granted,
demised, and let, and by these presents do grant, demise, and let,
unto the said lessee, all the following described mine and mining
property, situate in California mining district, County of Lake,
and State of Colorado, to-wit:"
"All their interest in the 'Buckeye' lode mining claim, situate
on the north slope of Fryer Hill, in said mining district, county,
and state, together with the appurtenances, to have and to hold
unto the said lessee for the term of two years from date hereof,
expiring at noon on the 29th day of July, A.D. 1887, unless sooner
forfeited or determined through the violation of any covenant
hereinafter against the said tenant reserved."
"And in consideration of such demise, the said lessee does
covenant and agree with the said lessors as follows, to-wit:"
"To enter upon said mine or premises and work the same
Page 132 U. S. 122
mine fashion in manner necessary to good and economical mining,
so as to take out the greatest amount of ore possible with due
regard to the development and preservation of the same as a
workable mine and to the special covenants hereinafter
"To well and sufficiently timber said mine at all points where
proper, in accordance with good mining, and to repair all old
timbering wherever it may become necessary."
"To keep at all times the drifts, shafts, tunnels, and other
workings thoroughly drained, and clear of loose rock and rubbish,
unless prevented by extraordinary mining casualty."
"To deliver to said lessors as royalty ten percent of the net
smelter returns of all ore extracted from said premises running to
and including twenty dollars ($20) per ton, and all ores running
over twenty dollars ($20) per ton, twenty-five percent of the net
"To deliver to the said lessors the said premises, with the
appurtenances and all improvements, in good order and condition,
with all drifts, shafts, tunnels, and other passages thoroughly
clear of loose rock and rubbish, and drained, and the mine ready
for immediate continued work (accidents not arising from negligence
alone excluded), without demand or further notice, on said 29th day
of July, A.D. 1887 at noon, or at any time previous, upon demand
"And, finally, that, upon the violation of any covenant or
covenants herein before reserved, the term of this lease shall at
the option of the lessors, expire, and the same, with said
premises, with the appurtenances, shall become forfeited to said
lessors, and said lessors, or their agent, may thereupon, after
demand of possession in writing, enter upon said premises and
dispossess all persons occupying the same, with or without process
of law, or, at the option of said lessors, the said tenant and all
persons found in occupation may be proceeded against as guilty of
"And the said lessors expressly reserve to themselves the
property and right of property in all minerals to be extracted from
said premises during the term of this lease."
"Each and every clause and covenant of this agreement of
Page 132 U. S. 123
lease shall extend to the heirs, executors, administrators, and
lawful assigns of all parties hereto."
"In witness whereof the said parties have hereunto set their
hands and seals."
"ROBERT ESSER [Seal]"
"DAVID K. HILL [Seal]"
"GEORGE A. JENKS [Seal]"
The obligation of Hill was assigned by Edward R. Sumner to Mary
J. Sumner, the present plaintiff in error, who brought this action.
Two issues were raised by the pleadings in the case. The first of
these was that there was a failure on the part of Hill to prosecute
with due diligence his obligation to develop the mine, whereby the
sum of $10,000, less the sums credited on the contract, became due.
The second was that, by making the lease, the complainant had,
within the meaning of the fifth clause of the contract, disposed of
the mining property so as to become immediately liable for the
residue of said $10,000. The court, by instructing the jury that
the execution of this lease by Hill caused the remainder of the
$10,000 to become due and payable, rendered it unnecessary for the
jury to consider the first proposition, and if the court was right
in that instruction, the verdict of the jury in favor of the
plaintiff necessarily followed. We shall therefore consider the
soundness of this instruction.
The definition of the words "dispose of" or "sell" in this
article must be considered with reference to the remainder of the
contract, to ascertain its meaning. Obviously, the word "dispose"
must have some meaning in the contract, and is not synonymous with
the word "sell." It would be useless if such were its construction.
It must mean something more or something less than the word "sell."
In the circumstances of this case, it would seem to mean something
more. The references of counsel in their briefs to decided cases
attempting to define that word are, of course, of very little
avail, as in each instance it must be taken in connection with the
circumstances in which it is used. In the language of this Court in
the case of Phelps v. Harris, 101
U. S. 380
, "the expression
Page 132 U. S. 124
to dispose of' is very broad, and signifies more than `to
sell.' Selling is but one mode of disposing of property."
Looking, then, to the purposes which Edward R. Sumner had in
view in the use of this clause, by which the sale or disposal of
one-eighth of the property rendered the $10,000 due, less the
credits that should have been entered upon it at that time, it is
obvious that it was expected that Hill would continue to make
efforts to develop the mine and put it in profitable working
condition until all parties were ready to abandon it as a useless
experiment or until the $10,000 which Hill had agreed to pay Edward
R. Sumner had been exhausted by payments of contribution on account
of the one-eighth interest remaining in Edward H. Sumner. Any
contract made by Hill which would put it out of his power to
perform this obligation was the thing to be guarded against, and
the only guard which the contract provided was that he should not
make such disposal of even one-eighth of the property. If he chose
to dispose of one-eighth or of the whole of it by selling it
outright, or by leasing it for two or five or ten years, he had the
right to do it. In such event, however, he became liable to Sumner
for so much of the $10,000 as had not been exhausted by paying the
contributions properly assessable against the one-eighth of Edward
H. Sumner. This option he exercised by making the lease to Jenks.
If the results of that lease have been as profitable as Hill might
have supposed it would be, he could well afford to pay the
remainder of the $10,000. If it did not, it was a losing venture
which he voluntarily entered upon.
We are of opinion that in doing this, he disposed of the
property within the meaning of the clause under consideration, and
instantly became liable for that part of the $10,000 which he had
not paid by advances on account of the interest of Edward H.
Sumner. As this view of the case was in accordance with
instructions of the presiding judge and is conclusive of it, the
judgment of the circuit court is